In February, the Departments of Labor, Treasury, and Health and Human Services issued final regulations implementing the new summary of benefits and coverage requirement under the Patient Protection and Affordable Care Act. The agencies also released a separate document providing additional guidance on the SBC requirement, which includes a template for the summary, instructions, sample language, a guide for coverage example calculations and the uniform glossary.
Under PPACA, group health plans and health insurance issuers are required to provide plan participants and beneficiaries with a summary document that accurately describes the benefits and coverage under the applicable plan or policy.
The SBC requirement applies to both fully insured and self-insured group health plans, regardless of grandfathered status. Generally, for self-insured group health plans, the obligation to provide an SBC belongs exclusively to the plan administrator. For fully insured plans, however, the obligation to provide an SBC is shared by the plan administrator and the health insurance issuer.
According to the final regulations, an SBC must be provided, without charge, in the following circumstances:
* By a group health insurance issuer to a group health plan. Upon application for health coverage, an SBC must be provided no later than seven business days following receipt of the application. If there is a change in the information to be included in the SBC, a current SBC must be provided prior to the first day of coverage. Upon renewal of health coverage, a new SBC must be provided no later than the date the materials are distributed if a written application for renewal is required, or no later than 30 days prior to the first day of the new policy year if renewal is automatic.
* By a group health insurance issuer and a group health plan to participants and beneficiaries. An SBC must be provided as part of any written application materials that are distributed by the plan or issuer for enrollment, or if written application materials are not distributed for enrollment, an SBC must be provided no later than the first day that the participant is eligible to enroll in coverage. If there is a change in the information to be included in the SBC prior to the first day of coverage, a current SBC must be provided prior to the first day of coverage. For special enrollees, an SBC must be provided no later than 90 days following enrollment. Upon renewal (i.e., open enrollment), a new SBC must be provided no later than the date on which the materials are distributed if a written application for renewal is required, or no later than 30 days prior to the first day of the new plan year if renewal is automatic.
Paper or electronic format
Generally, SBCs may be provided in either paper or electronic format. For SBCs provided electronically by a plan or issuer to participants and beneficiaries, the final regulations make a distinction between participants and beneficiaries who are already covered under a group health plan, and participants and beneficiaries who are eligible for coverage but not enrolled in a group health plan. For participants and beneficiaries who already are covered under a group health plan, the SBC may be provided electronically if DOL electronic disclosure regulations are met.
For participants and beneficiaries who are eligible for but not enrolled in coverage, the SBC may be provided electronically if the format is readily accessible, a paper copy of the SBC is provided free of charge upon request and if the electronic delivery is an Internet posting, the plan or issuer must advise the individual in paper form or via email that the documents are available on the Internet.
The final regulations require group health plan sponsors to provide an SBC to participants and beneficiaries who enroll or re-enroll in group health coverage through open enrollment beginning on the first day of the upcoming open enrollment season. For disclosures to participants and beneficiaries who enroll in group health coverage other than through open enrollment (e.g., newly eligible employees and special enrollees), the SBC must be provided by the first day of the first plan year that begins on or after Sept. 23. For calendar year plans, that's Jan. 1, 2013.
Contributing Editor Kate Bongiovanni is an associate in the tax section of Smith, Gambrell & Russell, LLP. She practices in employee benefits law, with a specific concentration in health and welfare matters, including compliance with health care reform legislation, ERISA, HIPAA, FMLA and COBRA. She can be reached at firstname.lastname@example.org.
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